LONDON – Copper prices wilted on Monday after weak economic data from top metals consumer China fuelled worries about demand.
Three-month copper on the London Metal Exchange (LME) dropped 1.6% to $9,420 a tonne by 1020 GMT, having gained 1.1% on Friday.
Equity markets and oil prices were also hit by the Chinese data, which showed factory output and retail sales growth in the world’s second-largest economy slowed sharply in July, missing expectations.
“The message we’re getting from the markets is risk-off because the data was disappointing,” said Julius Baer analyst Carsten Menke in Zurich.
“But we shouldn’t read too much into this data from July because of the potential distortions from COVID-19 restrictions and also from the floods.”
China has faced severe weather in several provinces, with record rainfall in Henan province last month causing floods that killed more than 300 people.
Menke added that copper’s correction probably had longer to run after it touched a record $10,747.50 a tonne in May. Menke is targeting fair value for LME copper at about $9,000.
The most-traded September copper contract on the Shanghai Futures Exchange closed 0.3% down at 69,660 yuan ($10,751.99) a tonne.
* Aluminium was the only LME metal in positive territory, rising 0.4% to $2,609 a tonne after China’s aluminium output slipped for a third month in July, with daily average levels at their lowest since October 2020.
* Record aluminium prices in the United States and Europe will be sustained by Russia’s mining tax for some months, but attempts to push prices even higher are likely to face resistance, analysts said according to Reuters.
* LME cash lead had spiked to a $93.40 premium over the three-month contract by Friday’s close, the strongest premium since 2007, suggesting shortages of immediate supply.
* LME lead dropped 0.6% to $2,319 a tonne, zinc fell 0.5% to $3,020, nickel eased 0.4% to $19,575 and tin dipped 0.3% to $35,215.
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